India-EU Free Trade Agreement: Implications for Turkish Goods in the Indian Market
India and the European Union (EU) have recently finalized a significant free trade agreement (FTA), described as the “mother of all deals.” However, a crucial aspect of this agreement raises questions about Turkey’s ability to reroute its goods to India. Officials have clarified that while Indian products can transit through Turkey to reach the EU, Turkish goods will not benefit from the FTA when attempting to enter India, even if shipped via EU ports. This situation stems from Turkey’s non-EU status in the FTA framework, which limits its trade advantages.
Turkey’s Position in the EU Customs Union
Under the EU-Turkey Customs Union, established in 1996, Turkey is obligated to align its tariffs with those of the EU. This means that when the EU reduces tariffs for its FTA partners, Turkey must extend similar tariff benefits to those countries. However, since Turkey is not a signatory to the India-EU FTA, it cannot gain reciprocal access to the Indian market. An official explained that Turkish goods, despite potentially passing through EU ports, cannot enter India duty-free. They remain classified as Turkish products and do not meet the rules of origin required by India’s FTA with the EU.
Details of the India-EU Free Trade Agreement
The recently concluded FTA between India and the EU is expected to be signed and implemented within the year. This agreement will provide preferential market access on 96.8% of tariff lines, covering a substantial portion of India’s exports to the EU. Specifically, it will make 99.5% of India’s exports by volume and 90.7% by value to the EU duty-free. While this agreement opens up significant opportunities for Indian exporters, it simultaneously highlights the limitations faced by Turkey in leveraging this deal for its own goods.
Impact on Trade Relations
The clarification regarding Turkey’s trade limitations comes amid already strained relations between India and Turkey. This tension has been exacerbated by Turkey’s support for Pakistan and its criticism of India’s military operations against terrorist camps in Pakistan earlier this year. Recent trade figures illustrate the declining trade relationship between India and Turkey, with Indian exports to Turkey dropping by 14.1% to $5.71 billion in the 2024-25 fiscal year, down from $6.65 billion the previous year. Similarly, imports from Turkey fell by 20.8% to approximately $3 billion.
Composition of Trade Between India and Turkey
India’s exports to Turkey include a diverse range of products such as mineral fuels, electrical machinery, automobiles, organic chemicals, and pharmaceuticals. In contrast, imports from Turkey consist of marble, fresh apples, gold, and various chemicals. This trade dynamic reflects the complexities of the relationship between the two nations, particularly in light of the recent developments surrounding the India-EU FTA and Turkey’s inability to capitalize on it. As both countries navigate these challenges, the future of their trade relationship remains uncertain.
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